Hotpot chain Haidilao, carmaker BYD lead stocks higher as China’s central bank cuts banks’ reserve ratios to boost recovery from pandemic
- The Hang Seng Index advanced 0.6 per cent to 27,515.24 in Monday trading
- The cut in the reserve requirement ratio will unleash about 1 trillion yuan (US$154 billion) into the financial system, the PBOC said
Hong Kong stocks rose for a second day after China’s central bank cut the amount of money commercial lenders must set aside as reserves in an effort to sustain a recovery from the pandemic.
China’s Shanghai Composite Index added 0.7 per cent. The ChiNext gauge of small caps that are more sensitive to liquidity saw a 3.7 per cent surge.
The 0.5 percentage point cut in the reserve requirement ratio, which was announced after the market closed on Friday, will unleash about 1 trillion yuan (US$154.5 billion) into the financial system, according to the People’s Bank of China. Still, the central bank said the cut does not signal a shift in general monetary policy, which has been normalised in the post-pandemic era.
“The cut in the reserve requirement will bolster sentiment in the short term and improve the liquidity of the stock market,” said Meng Lei, a strategist at UBS Group.
At the same time, the antitrust regulator announced it had blocked the merger of Huya and Douyu International Holdings, the two biggest video game live-streaming platforms that are both backed by Tencent Holdings. Tecent slipped 0.7 per cent to HK$534.50.
Chinese electric-car maker BYD and hotpot chain restaurant Haidilao International Holding were the top gainers on the Hang Seng Index, rising at least 7.8 per cent.
Two debutants started trading with mixed performances in Hong Kong. Ling Yue Services Group, a Chinese property-management firm, remained unchanged from its initial public offering price of HK$4.19. UNQ Holdings, a Shanghai-based online retailer of personal care products, slumped 24 per cent to HK$9.04.
On the mainland, Ningbo Shimao Energy, which generates power by cremating rubbish, surged by the maximum permissible 44 per cent to 20.42 yuan on its first day of trading in Shanghai.